This blog started off by focussing on NZ's smaller 3rd level airlines, past and present. It has evolved to trying to present some record of NZ's domestic airline operations and some of the larger charter operators, interesting NZ international airliner movements and photos I have taken around the country. Comments, corrections or contributions are welcome, Steve - westland831@gmail.com

29 July 2017

More Blenheim Disquiet

In recent days there has been a bit of flak from Sounds Air about Jetstar's pricing tactics and how this is eroding their Nelson flights. Now Blenheim people are saying they want the same fares Jetstar and Air NZ are offering out of Nelson. The point forgotten is no one makes a profit on the super cheap fares. They are part of a wider strategy to get people flying and fill empty seats. In the end the airline has to make a profit to survive. When an air fare war is going on airlines will take a hit to keep market share. However, there is a unrealistic presumption that Air NZ, in particular, has to offer loss making fares all the time, everywhere over its domestic network. This is simply unrealistic. So what do you make out of this piece?

Marlborough residents feeling short-changed by the cost of air fares have vented their frustration at Air New Zealand. The national carrier was accused of charging exorbitant prices, with many at a fiery public meeting sharing stories of the 90-minute drive to Nelson in search of cheaper fares. But a representative for the airline said the pricing structure in Blenheim was no different to other parts of the country, and fares were cheaper than they had been. Air New Zealand phased out the use of its 19-seat Beechcraft 1900D aircraft last year, months before pulling direct flights between Blenheim and Christchurch. Air NZ head of government and industry affairs Duncan Small said phasing out the smaller aircraft meant residents should be seeing lower prices. "I can say that you are experiencing significantly lower fares now than you were when we were running into Marlborough with the 19-seater aircraft," he said. The remark drew a murmur of objection from the more than 70-strong crowd on Tuesday. "It's almost like we've offended Air New Zealand somehow and they're making us pay," one man said. Blenheim woman Helen Smale said she felt the airline was paying lip service to the regions, but had not stepped in to reinstate direct flights to Christchurch after the earthquake. "Our region was affected quite badly in the earthquake. New Zealanders all pull together when things get tough, and you're certainly not doing that for us," she said. Her husband Tony Smale claimed flights between Blenheim and Auckland were roughly two-and-a-half times more expensive than flying from Nelson, which was also serviced by Jetstar. "It looks to us like we are subsidising the competitive nature of that route, because the differences are astonishing," he said. "Auckland is really important for us and we are just getting bowled over by it. It's just ridiculous that we can take time and expense to drive to Nelson and it's still cheaper." Smale came to the meeting armed with print-offs comparing the price of a return flight to Auckland from Nelson and Marlborough airports, leaving August 9 and returning August 11. The cheapest fare leaving Marlborough was $139; coming back was $159. The cheapest fare leaving Nelson was $59; the same price as the returning flight. However, Small refuted the claim prices were two-and-a-half times more expensive, saying the amount of lower price fares was down to capacity, and there was more capacity between Nelson and Auckland. "Your fares are not differently structured or out of whack, and your loadings are not out of whack with anywhere else in the country," he said. He was also emphatic that Air New Zealand would not be reinstating direct flights to Christchurch, saying they did not want to create uncertainty for other operators by jumping in and out. Attendees also spoke of the impact of air fares. One man claimed an exporting business was considering relocating to Christchurch because of the cost of flights in and out of Marlborough. Another said high air fares meant tourists were more likely to bypass Marlborough. "I hear what the room is telling me," Small said towards the end of the meeting. "You haven't offended us, and I can promise you that we're not going anywhere out of this market. We fly more seats into Marlborough now than ever before."

20 comments:

Firstly, nearly 60% of NZ's population is now centred in the 6 main centres being Auckland, Hamilton, Tauranga, Wellington, Christchurch and Dunedin with Rotorua, Palmerston North, New Plymouth, Nelson, Whangarei, Napier/Hastings and Invercargill being the main regional centres.

Air New Zealand Regional is operating good financially viable services between the main population centres and regional cities including tourist destinations of Kerikeri, Queenstown, Hokitika and Taupo. I am not sure why Air NZ is still servicing Timaru unless it is covering its costs.

Air NZ is a business and has to make a profit for the tax payer and can not operate services at a lost, especially since the airline is spending large sums of money in new aircraft like the B789's, A320/A321NEO's and the ATR72-600's. Air NZ is has been trimming their costs and any of you who is a Koru Club member will be experiencing the reduction of goodies in Air NZ domestic and regional lounges, moving to 1 aircraft type for both domestic, international short haul, international medium and long haul services. I have always said they will operate from destinations that has a good population catchment of 40,000 plus to make services viable.

With regards to Jetstar, they will cherry pick regional services to suit their and Qantas (and its co-share partners), trans tasman services. We all know that Jetstar's NZ regional Q300's services are losing money due to low fares. Air NZ is comfortable with Jetstar regional competition by using the ATR72's. I don't see Jetstar expanding its regional services for a while. If they do, it will be possibility one or two additional destinations probably in the North Island.

The rest of regional destinations are now available to NZ's two 2nd level air operators being Air Chathams and Soundsair. The question is, which one will seize the opportunity to expand their regional services that is not been catered for and take over other regional destination once Air NZ starts withdrawing the Q300's.

Last year, I mentioned, the existing 2nd and 3rd level air carriers should create a 2nd level national air travel brand, by pooling their equipment and destinations. With the statement from Soundsair Andrew Crawford, now openly discussing that they are looking a possibly of using 19 to 30 seater aircraft to give them variable pricing and increase capacity, makes alot of sense. Soundsair is shrewd and financially conservative carrier and I think that Andrew has seen the light there is a demand to get the right equipment to expand their services like Air Chathams has done.

Soundsair has lower operating costs compared to Air NZ and they could operate 19 to 30 seater aircraft cheaper than Air NZ to destinations that have population catchments of less than 40,000 using a mixture of single and twin engine aircraft.

I still of the opinion that Air Chathams and Soundsair should pool their equipment and destinations into a national 2nd level regional entity that is joint owned by both of them. It makes sense to do so.

Jetstar are apparently preparing to announce new regional destination(s) later this year. Qantas and Jetstar boards are currently deciding which ones. When their regional services were announced, thry said they didn't expect them to be profitable for 2-4 years.

Very few people trans-ship in AKL to connect TUO and WLG. I've met a few who fly WLG-ROT and drive home to Taupo. But for the most part, the few 8 seater direct flights a day suit the demand well it seems.